The following information is extracted from the City of Lucas’ government-wide statement of net position at December 31, 2019:
Capital assets $2,000,000
Accumulated depreciation, capital assets $1,600,000
Annual depreciation rate on capital assets 10%
Bonds payable -0-
The following information is extracted from the city's governmental funds statement of revenues, expenditures, and changes in fund balances for the year ended December 31, 2020.
Expenditures—capital outlay (General Fund) $40,000
Expenditures—capital outlay (Capital Projects Fund) $600,000
Expenditures—bond principal (Debt Service Fund) $60,000
Expenditures—bond interest (Debt Service Fund) $15,000
Proceeds from bond issue (Capital Projects Fund) $600,000
According to the notes to the financial statements, the city sold $600,000 of 5-year serial bonds on April 1, 2020, to finance the acquisition of capital assets. Principal is payable every six months, starting October 1, 2020. Interest of 5 percent per annum on the unpaid principal is also payable every six months, starting October 1, 2020. Assume all assets acquired in 2020 were acquired July 1 and all have a 10-year life.
A. Prepare journal entries so the foregoing information can be used in a worksheet to prepare government-wide financial statements for the year ended December 31, 2020.
B. Compute the amounts for the following statement elements as they will appear in the government-wide financial statements for the year ended December 31, 2020:
4. The city of Grace reported $12,000,000 of general capital assets and accumulated depreciation on these assets of $4,000,000 on its December 31, 2019 government-wide statement of net position. The city reported capital outlay expenditures of $1,200,000 in its governmental funds during its fiscal year ending December 31, 2020. Also, depreciation associated with general capital assets for the fiscal year ending December 31, 2020 was $800,000. Prepare the three journal entries needed for the December 31, 2020 worksheet that converts the governmental fund capital asset information to information needed for the government-wide financial statements.